Yesterday, Rosstat released its weekly CPI report for 7-13 May. Average daily consumer price growth picked up a bit to 0.019%, from 0.017% during the previous reported period (vs. 0.011% during the respective week in 2012). The growth in vegetable prices remains the key CPI driver, in particular potatoes (up 4.1% WoW vs. 4.8% WoW a week ago) and cabbage (up 5.9% WoW vs. 5.1% WoW). Gasoline prices stayed unchanged last week following three consecutive months of deflation, while the growth in vodka prices ticked down to 0.1% WoW (from 0.2% WoW over the previous week).
The inflation report suggests that annual CPI growth edged up to 7.3%, while adding 0.23% over 1-13 May. We note that the seasonal inflation in vegetables has started earlier this year than in 2012, which spurred headline CPI YoY growth in April but which we expect to lead to a decline in May. Last year, fruit and vegetable prices started accelerating in the second half of May, and the speed of this acceleration was abnormally high due to a poor harvest (2.6-2.8% WoW in 15-28 May 2012 and 3.6-4.4% WoW in June 2012 vs. 2.5% WoW in the first half of May this year). Thus, as the base effect in vegetables is set to become favourable later this month, for the full month we expect disinflation in the headline reading (to 7.0-7.1% YoY vs. 7.2% YoY in April).
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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